415 



to irrigators per se. 



Ironically, all of the counties in which irrigation is 

 dominant really are "distressed areas" — so classified by their 

 respective states on the basis of the underemployment and low wages 

 paid by the industry to the settled Mexican-origin workforce. 

 BPA's Records of Decision are silent on this distress. 



1.3 BPA fails to consider aore cost-effective aeans of 

 enhancing the "long- tern econoaic health" of the industry. 



Although the improvements in irrigators' net returns 

 attributable to the discount are 3%, if the agency's purpose is to 

 sustain returns to irrigation capital other forms of subsidy to 

 irrigators should be considered in lieu of the pumping discount. 

 Given the current value of water left in the river, the marginal 

 cost of power and the negative externalities associated with 

 excessive irrigation, there is sufficient reason to believe that 

 irrigators' returns may be maintained at less public cost through 

 a program of direct payments to irrigators for reductions in water 

 and power usage in the context of full market pricing for pumping 

 electricity. Certainly this option should be reviewed in BPA's 

 next Record of Decision on the irrigation discount. And in so doing 

 the agency should consider whether it intends to permit the export 

 of subsidy to national ownerships, from which the region derives no 

 economic benefit. Agricultural Production Area 22, for example, is 

 an area in Northeastern Oregon dominated by national and 

 multinational corporate faming operations and currently the 

 largest beneficiary of the discount. APA 22 'S portion will exceed 

 $1 million annually in the next two fiscal years. BPA needs to 

 determine what regional economic benefit accrues from the discount 

 in such cases. 



If, on the other hand, BPA intends to mitigate areas of real 

 distress in irrigated agriculture — the communities and the 

 workforce — the agency should consider more direct and cost- 

 effective alternatives to a discounted pumping rate. One notable 

 option in this respect has been suggested to the agency in a study 

 by Northwest Economic Associates in the form of a direct labor 

 subsidy for irrigation scheduling, which would have the effect not 

 only of providing employment in irrigation management and thus 

 addressing agricultural underemployment, but also recapturing 

 hydropower opportunity and enhancing streamflow through instream 

 water savings. 8) Similar proposals were made to the New York 

 State Power Authority on the issues of hydropower subsidy and job 

 retention. 9) The Tennessee Valley Authority also has well 

 established subsidy progreuas aimed at areas of agricultural 

 distress. 



Surely the federal regulator of the world's largest 

 hydrolectric system can do a better job of social engineering, if 

 that purports to be the agency's purpose in maintaining the 



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